Nasdaq said trading for all its listed stocks will resume
by about 3:25 p.m. following a 15-minute quote-only period,
according to a statement on its website.

Nasdaq said earlier that trading in shares it lists had
been stopped amid issues at its Securities Information
Processor, the feed that disseminates quotes and prices. The
second-biggest stock market operator in the U.S. halted
transactions in what it calls Tape C, which comprises all
Nasdaq-listed securities.

Buying and selling in many of the country’s most heavily
traded shares from Apple Inc. to Intel Corp. and Facebook Inc.
ground to a virtual halt as brokers were unable to execute
customer orders. The Nasdaq 100 equity index stopped moving
shortly after noon, according to data compiled by Bloomberg. The
Dow Jones Industrial Average, which has Microsoft Corp. and
Cisco Systems Inc., continued to update.

The disruption, just two days after options markets were
roiled by mistaken trades sent by Goldman Sachs Group Inc., is
the latest in a series of computer malfunctions that have raised
questions about the reliability of electronic markets. Nasdaq
faced criticism last year when its computers mishandled the
public debut of Facebook, causing hundreds of millions of
dollars in losses for its member firms.

‘Headache’

“This is just another one of those headaches that are
going on with this electronic stuff,” Frank Ingarra, head
trader at Greenwich, Connecticut-based NorthCoast Asset
Management LLC, said in a phone interview. “That’s why it is
important that you have multiple venues.”

The action froze stocks both on Nasdaq’s platforms and
dozens of other markets around the country that trade securities
it lists. Companies from Bats Global Markets Inc. in Lenexa,
Kansas, to Jersey City, New Jersey-based Direct Edge Holdings
published notices saying they were adopting Nasdaq’s halt.

Even though the action was specific to stocks Nasdaq hosts,
it depressed volume marketwide.

Securities on Nasdaq have a combined market capitalization
of more than $5 trillion, based on the value of the 2,446-member
Nasdaq Composite Index. For securities that list on the New York
Stock Exchange, it was “business as usual,” according to Sara
Rich, a spokeswoman.

Trading Breakdowns

The breakdown is one of a growing number of trading
failures that have coincided with the expanding complexity of
global financial markets. U.S. equity trading, which began with
on Wall Street more than two centuries ago and was dominated by
the New York Stock Exchange, has become dispersed among more
than 50 computerized platforms accessible around the world.

“It has essentially halted” trading, Ian Winer, director
of equity trading at Wedbush Securities Inc., said in an
interview. “We cannot execute customer orders in any Nasdaq
security so we are basically in a wait-and-see mode from
Nasdaq.”

Signs of strain appeared earlier when NYSE’s Arca canceled
orders for Nasdaq shares and other exchanges routed orders away
from the electronic platform through a procedure known as self-help. Just before 12:30 p.m., shares of Yahoo! Inc. briefly
plunged more than a dollar over about a dozen trades. Intel
surged 20 cents or more in a handful of transactions.

‘Close Contact’

“We are monitoring the situation and are in close contact
with the exchanges,” SEC spokesman John Nester said.

Options markets were bombarded with erroneous orders two
days ago when an internal computer at Goldman Sachs
malfunctioned. Options officials at Nasdaq as well as NYSE Amex
and CBOE Holdings spent almost a day reviewing orders for
cancellation..

In May, Nasdaq agreed to pay $10 million to settle
Securities and Exchange Commission charges related to the
initial public offering of Facebook. Regulators cited it for its
“poor systems and decision-making” during the IPO in May 2012
that was delayed when software the collects orders fell into a
loop. Nasdaq agreed to the settlement without admitting or
denying the SEC’s findings.

Facebook Fine

The SEC penalty was imposed because Nasdaq failed in its
obligation to ensure that systems, processes and contingency
planning are robust and adequate to manage an IPO without
disruption to the market, the agency said.

Legislation that created the Securities and Exchange
Commission in 1934 also deemed the main venues self-regulatory
organizations, or SROs, overseeing their member firms and
trading. Critics said the Facebook mishap shows how changes in
the structure of markets have made old regulations obsolete and
that firms such as Nasdaq should be regulated by any other for-profit company.

Exchanges have close to absolute immunity for actions taken
as part of their regulatory duties. The doctrine arose when
exchanges were not-for-profit organizations owned by their
member firms. The shield protects them from lawsuits related to
the exercise of powers delegated by the SEC and prevents
financial losses that could jeopardize institutions seen as
vital to the U.S. economy.